LEGAL ASPECTS
OF BUSINESS
PROF. SUDEEP KUMAR
TOPICS OF DISCUSSION
Why “Law” for Management students
Definition of law
Evolution of Laws
Classification of Laws
Business Law or Commercial law as mother of all civil laws
Judicial process
LAW FOR MANAGEMENT
STUDENTS?
Rights & obligations are two sides of the same coin. A
student must be aware of rights & remedies as well as
obligations in the capacity of:
(a) Manager
(b) Entrepreneur
(c) Director
(d) Individual
“Ignorantia juris non excusat” or ignorance of law is
no excuse
POTENTIAL
LITIGATION-
CORPORATES
Workmen injury at work-place
Employee thrown out of job
Racial discrimination at work-place
GENDER INEQUALITY AT WORK-
PLACE
SEXUAL HARASSMENT AT WORK-
PLACE
CHEATING
INVESTORS
Large hospitals
LIABILITY ARISING FROM
NEGLIGENCE
LIABILITY FROM POLLUTION
(MANUFACTURING)
FUKUSHIMA NUCLEAR
REACTOR LIABILITY
MANUFACTURING (POTENTIAL
PRODUCT LIABILITY )
Public Liability risk
POTENTIAL
LITIGATION (AS
INDIVIDUALS)
ROAD ACCIDENTS
LITIGATION THAT COULD ARISE
• Occupants/legal heirs registering criminal case u/s 337,338 & 304
of IPC against the driver of the offending vehicle.
• Occupants/legal heirs claiming compensation for bodily
injuries/death u/s 146 of Motor vehicles Act 1988 against owner
(or insurer) of offending vehicle.
• The owner of the tree registering criminal case u/s 279 of IPC for
third party property damages against driver of the offending
vehicle.
• The owner of the tree claiming compensation for third party
property damages u/s 146 of Motor vehicles Act 1988 against
owner (or insurer) of offending vehicle.
LITIGATION THAT COULD ARISE-
CONT’D
• The driver of the vehicle against the owner of offending vehicle for
injuries sustained by him in the course & out of employment under
Workmen compensation Act 1923.
• If the accident had resulted from a burst tyre or failed brakes, the
tyre manufacturer or vehicle manufacturer could have liability.
• If a road-side culvert or payment has been damaged, the Public
works Dept. could register a criminal case under IPC & claim
compensation u/s 146.
DOG BITE
LIABILITY
POTENTIAL LITIGATION
(INDIVIDUAL)
• A landlord/owner/tenant of a house is liable for accidental
injuries caused by his/her pet dog on visitors/guests (not
trespassers).
• A landlord/owner/tenant of a house is liable for accidental
damages to neighbor's compound wall due to falling of a
tree from his garden or TV antenna from roof top.
• House-owners can become liable for medical expenses, loss
of income, pain & suffering, disfigurement/ disabilities etc
suffered by domestic servants.
KNOWLEDGE OF LAW
(ENTREPRENEUR/MANAGER)
• Understanding of legal entities like Private Co, Public Ltd
Co, Partnership, Limited Liability Partnership. Method of
conversion to another.
• Knowledge on execution of contracts/SLAs.
• Understanding intellectual property laws
• Understanding laws on consumer protection
• Knowledge of laws on Competition, unfair trade practices.
• Understanding Negotiable instruments Act
RECENT LEGAL ISSUES
• Leadership at TATA group
• Triple talaq
• Removal of restrictions for entry of women in temple
• Decriminalization of homosexuality.
• Sec 479(IPC) on Adultery law
• Citizenship Amendment Act 2019
• CBI arrest of erstwhile ICICI Bank CEO Ms.Chanda Kocchar
WHAT IS LAW?
Contrary to laws in Physics/Mathematics or a game of
cricket, law in jurisprudence refers to “the body of rules
whether proceeding from formal enactment or from custom
which a particular state/community recognizes as binding
on its subjects or members”.
Regulating mechanism enforced by the state to control and
police human conduct to maintain peace and order in the
society.
“In a civilized society, disputes are settled not on the streets
using muscle power, but in courts..
One may love or loathe laws but inevitably there is no escape
from them. Governs ones conduct from cradle to grave.
BASIC LEGAL CONCEPTS
Evolution of law: From Kings to British laws and modern
day laws.
Legal entity: Law applies only to persons & hence persons
are the subjects of law. A person is an entity clothed with
rights & duties. All human beings are natural persons
(tangible & visible) while a Public Limited Company is an
artificial person (intangible & invisible)
Property includes movable & immovable tangible assets as
well as intangibles such as copy right, trade mark or patent
right.
CLASSIFICATION OF LAW
1.PUBLIC LAW
This is the branch of law that determines & regulates the
functioning of states (countries/Governments)
• Common law
• Civil law
• Criminal law
• Statutory law
CLASSIFICATION OF LAW
2.PRIVATE LAW
• Relate to person, property, obligations & conflict
• Law of contract.
• Laws relating to ownership/transfer of property
• Law of succession
• Family laws.
• Law of tort etc.
Penalty for criminal law is imprisonment & fines,
whereas under civil law, damages are awarded to
aggrieved parties.
MERCANTILE/ BUSINESS LAW
Is a branch of law which prescribes a set of rules
governing trade, industry & commerce. Mercantile law
is not a separate law but part of Civil law dealing with:
(a) Prevention of concentration of economic power.
(b) Foreign exchange Management/regulation
(c) Insolvency of business persons
(d) Negotiable Instruments
(e) Patents/trade marks & copyright laws
(f) Export/Import regulation
(g) Regulation of stock exchange/financial securities
(h) Excise/Import/Export duties & Income/wealth tax
OTHER COMMERCIAL LAWS
• Environmental laws
• Laws governing taxes, custom/excise duties
• Laws governing labor, minimum wages, Payment of
PF/Gratuity etc.
• Laws on workmen compensation, factories Act.
• Law of industrial disputes
• Laws governing Information technology
• Laws governing e-commerce
MERCANTILE LAW
OR
BUSINESS LAW
SOURCES OF MERCANTILE LAW
IN INDIA
Primary sources
• Indian statutes
• Judicial decisions
• Customs & usages
• Personal Law
Secondary sources
English Law
Justice, Equity & good conscience
RELATIONSHIP BETWEEN BUSINESS &
ENVIRONMENT
Social
And
Moral
system
Scientific
And Economic
Technology
business system
system
Political
System
Including
legal
LAWS TO PROTECT ALL STAKEHOLDERS
HOW LEGAL SYSTEMS
COULD AFFECT BUSINESS
• First KFC outlet open at Bangalore City
Corporation(1995). High level of MSG(2%)against
accepted level of 1% by PFA Act 1954.
• Scrapping of Enron-Dhabol power project in
Maharashtra when there were corruption allegations
against ruling Congress party.
• Maggie noodles case (2015).
• Vodafone-Idea merger (2018)
• Sale of Future group to Reliance retail (2020)
GLOSSARY OF SOME LEGAL
TERMS
• Complainant/Petitioner/Applicant
• Defendant/Respondent/Opposite party
• Advocate/Counsel/Solicitor/Attorney
• Petition/Application/Complaint/Plaint/Writ
• Summons
• Subpoena
• Subjudice
• Award/Decree/Judgement/Order
• Appeal
• Mandamus
